My husband and I were recently at a crossroads: Should we buy a new home to give our growing family more breathing room, or keep our spending to a minimum and stay in our first home?
With the help of our financial adviser, we looked at our budget and learned that if we limited our spending in some discretionary categories, we could afford to spend a couple hundred dollars more each month on our mortgage.
But we ultimately decided to buy a new home because of something else our adviser said: We probably wouldn't even notice the change to our spending in a year or two.
A financial adviser can help you purchase your dream home. Use SmartAsset's free tool to connect with a qualified professional »

Pretty much the moment we graduate from college we immediately start having to make financial decisions that seem like they'll have an impact on our money for years to come.
When and how to start paying back student loans, which job to take (or even where to apply), whether to buy a house or keep renting, have a kid (or two or three) ... it all adds up to a monumental weight on our shoulders — and our bank accounts.
Recently, my husband and I were at such a crossroads: We loved the house we were living in, which we had purchased a little more than three years prior, but with our growing family, space was getting tight.
We wanted to upgrade, but we were having trouble deciding whether that was the right financial move. Our financial adviser helped us see that, by cutting a little bit from different buckets of our budget, we could make a more expensive home purchase work. But just because we could make something work financially, did that mean we should?
Our financial adviser's life-changing advice
I've talked before about how our financial adviser helped us figure out the finances of buying a new home — how to determine how much more we could afford per month on a mortgage, how to ensure we continued saving for our other important goals, etc. — but despite all that planning, there was actually one thing he said to us that really helped me make up my mind.
He said that although yes, for the immediate future, it might seem like siphoning off a little extra to cover a larger mortgage is a struggle, it was likely that just a few years down the road we wouldn't even feel the difference.
Want to talk to a financial adviser about buying a home? Find a qualified professional near you using SmartAsset's free tool »
What he was essentially saying, in my mind, is that budgeting and planning and saving are essential for hitting goals, but in this game of life, sometimes you just have to have a little faith and take the leap. We'd get used to our new budget over time and, with any luck, we'd be making more money in the future, too.
The moment things finally clicked
Suddenly, buying a new home became about much more than just paying a couple extra hundred dollars a month.
It meant investing in a future where I saw myself and my husband continuing to advance in our careers. It meant providing my family with a little extra room to breathe. It meant purchasing a home that could, if all goes to plan, reap us larger rewards when/if we're ready to sell again.
When he put it in that context, I began to see how having a proper budget in place is the key to allowing you to feel safe when it comes to taking these kinds of leaps of faith.
I also began to see how most of my financial decisions up to that point — forgoing a large wedding to get married at city hall, deciding to freelance full-time, investing in our first house, and having our two daughters — had been leaps of faith as well.
Luckily, with a solid budget to back it up — and some professional input from time to time — leaps of faith can be just a little bit less scary.
Talk to a financial adviser about your dream home today. Use SmartAsset's free tool to find a qualified professional »

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Certified Financial Planner (and Business Insider contributor) Natalie Taylor sent a note out to her...

Certified Financial Planner (and Business Insider contributor) Natalie Taylor sent a note out to her clients this week offering some advice on how to weather the coronavirus-related financial storm.
She advised her clients to examine their budgets and make some adjustments for the next several months, keep plenty of cash on hand, use your emergency fund if you need to, and remain invested.
She also reminded them that stress can cause us to want to "do" things, but what we need most right now may be to do nothing.
SmartAsset's free tool can find a financial planner to help you take control of your money »
Natalie Taylor is a Certified Financial Planner who helps professionals in their 30s and 40s navigate the tradeoffs between saving for retirement, paying off debt, saving for college, buying homes, taking family vacations, and making decisions around investing, insurance, and career changes.
As the stock market continued its coronavirus-related free fall this week, Taylor sent out an email offering five pieces of advice to her clients to help them weather the storm. Her letter is printed in full below.
Here's what she wrote
What a crazy time this is! As I juggle work and childcare and homeschool and toilet paper shortages and convincing my parents to take this all seriously, I know that you're juggling it all, too. We're in this together.
I want to reach out with some perspective and guidance for your personal finances.
Don't let stress short-circuit your decisions
Stress often leads us to feeling very action-oriented. We skip over the thinking and feeling, and get right to doing. I encourage you, as I am doing myself, to slow down before making any decisions and acknowledge how you're thinking and feeling before you take action. Don't hesitate to reach out to me so that we can talk things through before you make any big moves.
Will your income change in the short-term or mid-term?
Consider whether your income may change in the coming weeks or months. If there's a decent chance that your income could drop, begin adjusting your budget right away and estimate whether your reduced income will be sufficient to cover your expenses.
If income won't be enough, make a list of your next-best places to access cash to cover expenses — emergency fund, home equity line, low-interest personal loan, credit cards, etc.
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You may also want to look into employer and government benefits, like sick leave, unemployment insurance, and paid family leave.
Reduce expenses for the next few months
Whether you anticipate your income will drop or not, it's a good idea to review your budget and make some adjustments to reduce expenses for the next three to six months. Make sure to capture any money saved in your emergency fund if you can. These changes aren't forever, so figure out what you can reasonably do in the short-term.
Stock up on cash
If we've worked together for some time, you likely already have a well-stocked emergency fund. This is what it's for! I hope it's giving you comfort to have cash stashed away if you need it.
If your emergency fund isn't quite full, do what you can to reduce expenses short-term and put a little extra cash in the bank. For example, if you have to cancel travel plans, you should be able to get full refunds, and you can put that cash in your emergency fund. Every little bit helps.
Use tax refunds to pad your emergency fund. And keep in mind that although IRS payments have been extended until mid-July, your state may still require that you file and pay income taxes by April 15. Plan to file federal and state taxes by April 15, but know that you have a little extra time to pay if you owe the IRS.
And although there's no need to worry, it's a good idea to make sure your cash is FDIC insured.
Stay invested
I have to admit this market has literally taken my breath away several times over the last few weeks. I managed client money through the Great Recession when the market dropped 57%, but the last few weeks have been something else! If you're freaked out and want to stop the bleeding in your portfolio, I get it. I have those same feelings. Our brains are wired to want to take action and protect us from loss.
I do still, however, continue to believe that markets will continue to act like markets ... more volatility, more drops, intermittent recovery days, maybe a false recovery in there (just to mess with our heads), and ultimate recovery. Volatility and recessions are the price we pay for the potential long-term gains that the market has historically provided.
If you're thinking about getting out of the market, I encourage you to pause and think about how that will play out and when you'll get back in.
If you get out when the Dow is at 19,000, are you going to buy back in when it hits 15,000? What if it then goes to 12,000? Are you going to get back out to stem losses or buy more? And then maybe the market eventually recovers and gets back to 30,000. Were you in on the recovery? Or did it feel too late to get back in once it was climbing? Or did it feel like a "false recovery" so you stayed out?
Our emotions are notoriously terrible at driving the right investment decisions, but they're so strong!
If you don't need to use your portfolio for 10+ years, so as long as it's substantially higher 10+ years from now, you're in good shape. What we're aiming for is that your portfolio doubles about every 10 years.
Even if you invested every dollar right before the Great Recession hit and the market dropped 57%, your money still would have come close to doubling over that 10-year time period.
So instead of watching your portfolio drop and feeling like a sitting duck, remind yourself that you are strategically staying invested for the long term based on historical data that has shown the likelihood of an eventual market recovery to be very strong.
Optimize your debt
With interest rates dropping, there have been some excellent mortgage rates available recently. Especially if your interest rate is 4% or higher, it could be an excellent time to refinance.
But with such low rates recently, demand for refinancing has been exceptionally high and rates have popped up a bit because of it. I'll make sure to stay on top of rates and let you know when there's an opportunity to lower your rate.
If you have a home-equity line of credit or adjustable-rate mortgage, your interest rate could adjust downward, which would save you some interest.
It's also a good idea to have a clear picture of what debt you have available to you, just in case you need it.
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How much you should spend vs. save varies from person to person; it depends on the...

How much you should spend vs. save varies from person to person; it depends on the type of lifestyle you want to live now and in the future.
Still, there are a few signs that indicate you could be headed in the wrong direction.
Generally, if you carry a balance on a credit card, budget based on your pretax salary, or aren't saving any money, you're probably overspending.
SmartAsset's free tool can help find a financial adviser to get your money on track »
If you want to end up wealthy one day, it's crucial to keep your spending in check.
Many millionaires say the secret to building wealth is living below your means. But it's not always easy to manage if you have a below average income, student loans, or other people to financially support.
How much of your income you should spend vs. save or invest depends on the lifestyle you want to live now and in the future, as well as your personal financial goals. You may be able to identify these and make a plan on your own, but if you feel overwhelmed or unsure, a financial planner can help.
Here are a few red flags that indicate you're spending more than you can afford and tips for getting back on track.
1. Your budget is based on your salary or hourly rate
You probably have a nice, round number attached to your job title, whether it's an annual salary or an hourly rate, but that's not what you're actually bringing home. After Uncle Sam takes his share of taxes and the state you live in takes its own share, you're probably left with less than you think.
If you budget your money based on your pretax number and not the amount that ends up in your pocket, you're likely overestimating how much you can afford to spend. Use a simple online calculator to find your take-home pay and go from there.
2. Your expenses exceed your income
Life can be costly, but the key to achieving financial stability is having more money coming in than going out.
When you list all of your monthly fixed and variable expenses — from rent to food to your gym membership — the sum should not exceed your monthly income. If it does and you don't cut back somewhere, you may end up in debt.
Managing cash flow can be tough for people with inconsistent income, such as contractors or freelancers. Try finding your income baseline — either the average of your income for the last 12 months or, to be extra safe, your worst-earning month — and use that to decide your limit for expenses.
3. You have a negative net worth
When your expenses exceed your income for too long, you may end up with a negative net worth — what you owe is greater than what you own.
If you find yourself in the hole, you're not alone. The Federal Reserve Bank of New York reported in 2016 that about 15% of US households have net worth equal to zero or less.
If you think it could take longer than five years to repay your debts, you may consider filing for bankruptcy to provide some relief, Debt.org advises. However, not all types of debt are forgiven in bankruptcy and it can affect your ability to borrow money in the future. Devising a debt repayment plan with a financial planner may be better option.
4. You carry a balance on your credit card
Using a credit card for all or most of your purchases is perfectly fine, as long as you are able to pay off the balance in full every month. If you don't, or you simply make the minimum payment, the remaining balance will begin to accrue interest and grow exponentially.
Credit-card debt doesn't mean you're doomed, but it's a surefire sign that you're spending (or spent) money you don't actually have. Consider consolidating your debt with a personal loan or a 0% balance transfer card.
5. Your rent or mortgage exceeds 30% of after-tax income
The standard measure of housing affordability in the US is 30% of pretax income. For example, someone with an annual salary of $50,000 should ideally spend less than $1,250 a month on housing costs. But that doesn't factor in taxes.
A more helpful way to gauge whether you're overspending on housing is to try and limit your monthly expenses to 30% of your after-tax income. This can be tough to manage in a high cost-of-living city, but it's a good benchmark to aim for. Use an online calculator to estimate your take-home pay, multiply that by 30%, and divide by 12 to get your target number.
6. You buy things to keep up with or impress your friends
If you're buying a ticket to every festival or joining every happy hour because that's what your friends are doing, it may be a sign you're spending more than you can afford.
Social media exacerbates the "Keeping up with the Joneses" affliction many of us suffer from. You probably don't know the financial situation of each of your friends and assuming you can afford something because they can — or worse, you're trying to impress them — isn't a sustainable strategy.
7. You aren't saving at all
Saving for retirement and big expenses should always be a part of your budget. Maybe you've convinced yourself you can't save because you don't make enough money or your rent is too high, but chances are you're simply spending too much.
Use an app like Mint or Personal Capital to take a hard look at where your money is going every month and choose one or more things to cut back on or eliminate all together. Or better yet, meet with a financial planner who can help map out a strategy for short-term and long-term savings goals. You have more control over your money than you may realize.
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My husband and I recently paid off our credit card debt and decided to meet with...

My husband and I recently paid off our credit card debt and decided to meet with a financial planner to establish new spending and saving habits.
He recommended two strategies: putting money into our savings first, and opening a business checking account for my freelance income.
It'll take time to build up our savings, but I already feel more secure knowing we have a plan.
A financial planner can help you spend less and save more. Use SmartAsset's free tool to connect with a qualified professional »
For my husband and me, financial well-being is a top priority after neglecting it for years. We've made our fair share of irresponsible spending choices, which resulted in credit card debt and a lack of savings.
Thankfully, since adjusting our budget and increasing our income, we've been able to pay off our credit card debt and make a bigger dent in our student loans. But now that we've removed the elephant that's been in the room for half a decade, we weren't sure how to create habits that would ensure a healthier financial future for our family of four.
Our main question was this: What's the next step, now that we're out of debt? To find the answer, we decided to meet with a new financial planner.
A friend connected us to a certified financial planner (CFP) based in Chicago. We had an initial consultation on the phone, and I appreciated the CFP's direct style and sense of humor. He's also a parent, so we felt he could offer helpful insight on how to approach budgeting and saving with kids (and understand how expensive they can be).
We decided to move forward with a planning meeting, and we couldn't believe how much we learned in those 60 minutes. Most of the call was going over our personal financial goals, both short and long term, and coming up with habits and strategies that would allow us to meet these goals over time.
My husband and I agreed that we wanted to budget more effectively, save more money for retirement and our kids' college, and set aside as much as we can for emergencies along with spending and travel.
Based on our current financial situation, the CFP made two recommendations that we're already starting to put in place: budgeting differently and streamlining my cash flow as a freelancer.
'Pay yourself first'
I'll be the first to admit that the way my husband and I have budgeted in the past hasn't worked. For a lot of months, we didn't budget at all — the process either felt overwhelming or we simply didn't make time to sit down and create a plan for our income.
Other months, we budgeted in a way that showed us where our money was going, but didn't contribute to our overall wealth. In other words, we didn't prioritize saving.
A CFP can help you find ways to save more. Use SmartAsset's free tool to connect with a qualified professional »
In our meeting, the CFP recommended that we try to shift our perspective on budgeting. Instead of allocating all of our income toward expenses, he encouraged us to "pay ourselves first" — to set aside a certain amount for savings before it even hits our checking account.
Along with my husband's 401(k) contribution, we plan to start allocating a specific amount to general savings from his paycheck. Since I'm a freelancer, I'll be putting aside a sum for my own retirement. I plan to ask in our next financial meeting the most effective way to invest in retirement as a self-employed person.
Create a separate business checking account
At times, living as a freelance writer means living month to month. All of my clients pay me different amounts at different times, and my workload can also vary drastically in a given month.
That said, I've always had clients pay me via direct deposit to our joint checking account, since we generally needed all the money I was making. There's nothing inherently wrong with using the money you make, but for us, having the money available makes us more likely to spend it.
Since at this point we don't need all the money I'm making for our immediate budget, the CFP recommended that I create a separate checking account for my business, and pay myself bi-monthly into the joint account. The goal is to be able to budget based on my husband's paychecks and my pre-determined self-payments each month, and to save the rest for estimated quarterly taxes or an emergency fund.
While it might take some time for us to notice a major difference in the state of our finances, it feels good to have a plan in place, and a financial advocate who can hold us accountable along the way. Once we have some savings built up, we're excited to learn more from our financial planner about how we can invest our money in other, potentially more fruitful ways.
A financial planner can help you spend less and save more. Use SmartAsset's free tool to connect with a qualified professional »
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